CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 2-2 Journalizing and Posting Cash Receipts Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-Western Departmental Cash Receipts Cash receipts are recorded in the cash receipts journal The sources of most cash receipts are: Cash received from customer payments on account Cash & credit card sales To encourage early payment, a business may grant a deduction on the invoice amount. A deduction that a vendor allow on the invoice amount to encourage prompt payment is known as a cash discount A cash discount on sales is called a sales discount. Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School DEPARTMENTAL CASH RECEIPTS 8.25% Sales TaxSales AmountTotal Invoice Amount+ = $1, = $1,840.25$ Discount RateInvoice AmountSales Discount× = $1, × = $36.812% 2% Sales DiscountTotal Invoice AmountAmount Due in 10 Days– = $1, – = $1,803.44$36.81 Terms: 2/10, n/30 Invoice paid within 10 days: page 44

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School 5.Write the sales discount debit amount. June 1. Received cash on account from Olympic Productions, $1,803.44, covering Sales Invoice No. 96 for audio equipment for $1, ($1, plus sales tax, $140.25), less 2% discount, $ Receipt No Write the date. 1 3.Record the receipt number. 3 4.Write the accounts receivable credit amount. 4 2.Write the customer name. 2 6.Write the cash debit amount. 6 JOURNALIZING A CASH RECEIPT WITH A SALES DISCOUNT page 45

CENTURY 21 ACCOUNTING © Thomson/South-Western Cash Receipt with a Sales Return A transaction for cash received when there is a sales return or allowance is journalized the same way as a cash receipt without a sales return or allowance Sales discounts are calculated on the amount owed at the time the invoice is paid. When a customer takes a discount after being granted a return or allowance, the amount of the return or allowance must be deducted from the amount of the original sale before the discount can be calculated Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School June 8. Received cash on account from Kim Electronics, $159.12, covering Sales Invoice No. 101 for $ ($ plus sales tax, $23.10), less Credit Memorandum No. 43 for $ ($ plus sales tax, $10.73), less 2% discount, $3.25. Receipt No Write the sales discount debit amount. 1.Write date. 3.Record receipt number. 4.Write the account receivable credit amount. 2.Write the customer name. 6.Write the cash debit amount. JOURNALIZING A CASH RECEIPT WITH A SALES RETURN AND A SALES DISCOUNT page

CENTURY 21 ACCOUNTING © Thomson/South-Western JOURNALIZING CASH AND CREDIT CARD SALES Both cash & credit card sales are entered into a modern version of a cash register. A computer used to collect, store, & report all the information of a sales transaction is called a point-of-sale (POS) terminal The report that summarizes the cash & credit card sales of a point-of-sale terminal is called a terminal summary The terminal summary (TS) is the source document for cash & credit card sales. Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School 1.Date 3.Cash register tape number 4.Check mark in Post. Ref. column 2.Check mark in Account Title column 7.Cash debit amount June 11. Recorded cash and credit card sales, audio equipment, $4,370.00; video equipment, $6,280.00; plus sales tax, $878.63; total $11, Terminal Summary No Sales tax payable credit amount 6.Sales credit amounts JOURNALIZING CASH AND CREDIT CARD SALES page

CENTURY 21 ACCOUNTING © Thomson/South-Western POSTING FROM A CASH RECEIPTS JOURNAL Individual amounts are posted often from the cash receipts journal Frequent postings are required to keep the customers’ accounts up to date Frequent posting are made from the general debit & credit column of the cash receipts journal At the end of the month, the cash receipts journal is proved & ruled Totals of the special amount columns are then posted to their respective accounts in the general ledger Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School 2.Column totals are posted to the account named in the column heading. 1.Individual amounts are posted to the accounts receivable ledger. POSTING FROM A CASH RECEIPTS JOURNAL page

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School ORDER OF POSTING FROM JOURNALS Businesses post transactions affecting vendor & customer accounts often during the month so that balances of subsidiary ledger accounts are kept up to date General ledger accounts may be done less frequently The recommended order in which to post journals is: Sales journal Purchases journal General journal Cash receipts journal Cash payments journal page 49

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School TERMS REVIEW sales discount point-of-sale (POS) terminal terminal summary page 50